Saunders' deal with BOA could flood Brunswick lot market

Published: Saturday, December 22, 2012 at 10:00 a.m.

Last Modified: Friday, December 21, 2012 at 9:31 p.m.

A recent settlement between a major Brunswick County developer and Bank of America could have an impact on the residential lot market in an area awash in unsold land.

Developer Mark Saunders and companies controlled by him have handed over 750 parcels of property to the bank, according to documents filed with the Brunswick County Register of Deeds.

They include parcels in Ocean Isle Palms, Seawatch at Sunset Harbor and Ocean Ridge Plantation.

The transfer was recorded earlier this month after an out-of-court settlement of a lawsuit by the bank charging the Saunders companies had defaulted on a $78 million loan.

The effect on the market for lots depends on what Bank of America does with the land.

Today's prices

In many cases, a lender sells foreclosed residential lots to investors or directly to home builders who buy the lots at bargain prices. Those bargains allow the builder to build homes at today's market prices – often a lot lower than they were before the bank took them over.

Bank of America has not said what it will do with the lots and didn't return a phone call Thursday inquiring about its plans.

Lot prices already have plunged from levels when they originally were marketed.

Lots that were at one time $250,000 – during the real estate boom of the last decade – are now going for half or even a quarter of that if they are bank-owned, said Pete Frandano, a commercial broker with Southport Realty and a former president of the Brunswick Realtors.

But some real estate experts think new owners for the lots will be a positive.

"The county sees transfer of the 750 lots as a possibility for development," said Brunswick Planning Board member Steve Candler, who also is CEO of the Brunswick Realtors.

"It is a positive thing because the land is very valuable so close to the beach," said Mary Ann Bechtel of Mary Ann Bechtel Real Estate, the western Brunswick real estate company that is active in Saunders' developments.

"If someone comes in and buys at foreclosure prices and gets the communities moving it's a positive thing," Bechtel said.

"I hope Mark finishes the neighborhoods, what he has, but the reality is that it's been a long time," he said. "If someone can come in and spark the life into them it's very positive."

Saunders has not completed amenities in some developments and many lots have no infrastructure.

The negative side

There still is the possibility, however, that the transfer of the 750 lots could have a negative effect on a market that has been improving in recent years.

There are about 2,300 residential lots on the Brunswick County Association of Realtors' multiple listing service, Frandano said.

Though there are many more that are not listed, those on the MLS are a good indicator of the market, he added.

If those lots are already listed on the MLS and Bank of America sells them, it would cut the inventory by 30 percent, Frandano said.

On the other hand, if they are part of the so-called shadow inventory of foreclosed properties that have not been released by lenders, it would have the opposite effect and increase the supply of lots dramatically.

But overall, Brunswick's residential lot market has improved in recent years.

Three years ago there was about a 140-month supply of lots listed in Brunswick County. That has come down to about 30 months, Frandano said. That means that it would take 30 months to sell all the lots at today's sales pace.

Investors also are starting to re-enter the market looking for deals, he said.

But some lenders are also selling individual lots, and home builders are looking to buy again.

It's not so much local builders (looking) as it is huge companies – Lennar and D.R. Horton and Pulte – who "are scanning the landscape again," Frandano said.

"I definitely think that the amount of interest we have in lots today compared to two, three, four years ago it is markedly different," he said. "It's not up to 2006 levels, but it's quite a bit more than three years ago."

<p>A recent settlement between a major Brunswick County developer and Bank of America could have an impact on the residential lot market in an area awash in unsold land.</p><p>Developer Mark Saunders and companies controlled by him have handed over 750 parcels of property to the bank, according to documents filed with the Brunswick County Register of Deeds.</p><p>They include parcels in Ocean Isle Palms, Seawatch at Sunset Harbor and Ocean Ridge Plantation.</p><p>The transfer was recorded earlier this month after an out-of-court settlement of a lawsuit by the bank charging the Saunders companies had defaulted on a $78 million loan.</p><p>The effect on the market for lots depends on what Bank of America does with the land.</p><h3>Today's prices</h3>
<p>In many cases, a lender sells foreclosed residential lots to investors or directly to home builders who buy the lots at bargain prices. Those bargains allow the builder to build homes at today's market prices – often a lot lower than they were before the bank took them over.</p><p>Bank of America has not said what it will do with the lots and didn't return a phone call Thursday inquiring about its plans.</p><p>Lot prices already have plunged from levels when they originally were marketed.</p><p>Lots that were at one time $250,000 – during the real estate boom of the last decade – are now going for half or even a quarter of that if they are bank-owned, said Pete Frandano, a commercial broker with Southport Realty and a former president of the Brunswick Realtors.</p><p>But some real estate experts think new owners for the lots will be a positive.</p><p>"The county sees transfer of the 750 lots as a possibility for development," said Brunswick Planning Board member Steve Candler, who also is CEO of the Brunswick Realtors.</p><p>"It is a positive thing because the land is very valuable so close to the beach," said Mary Ann Bechtel of Mary Ann Bechtel Real Estate, the western Brunswick real estate company that is active in Saunders' developments.</p><p>"If someone comes in and buys at foreclosure prices and gets the communities moving it's a positive thing," Bechtel said.</p><p>"I hope Mark finishes the neighborhoods, what he has, but the reality is that it's been a long time," he said. "If someone can come in and spark the life into them it's very positive."</p><p>Saunders has not completed amenities in some developments and many lots have no infrastructure.</p><h3>The negative side</h3>
<p>There still is the possibility, however, that the transfer of the 750 lots could have a negative effect on a market that has been improving in recent years.</p><p>There are about 2,300 residential lots on the Brunswick County Association of Realtors' multiple listing service, Frandano said. </p><p>Though there are many more that are not listed, those on the MLS are a good indicator of the market, he added.</p><p>If those lots are already listed on the MLS and Bank of America sells them, it would cut the inventory by 30 percent, Frandano said.</p><p>On the other hand, if they are part of the so-called shadow inventory of foreclosed properties that have not been released by lenders, it would have the opposite effect and increase the supply of lots dramatically.</p><p>But overall, Brunswick's residential lot market has improved in recent years.</p><p>Three years ago there was about a 140-month supply of lots listed in Brunswick County. That has come down to about 30 months, Frandano said. That means that it would take 30 months to sell all the lots at today's sales pace.</p><p>Investors also are starting to re-enter the market looking for deals, he said.</p><p>But some lenders are also selling individual lots, and home builders are looking to buy again.</p><p>It's not so much local builders (looking) as it is huge companies – Lennar and D.R. Horton and Pulte – who "are scanning the landscape again," Frandano said.</p><p>"I definitely think that the amount of interest we have in lots today compared to two, three, four years ago it is markedly different," he said. "It's not up to 2006 levels, but it's quite a bit more than three years ago."</p><p><i></p><p><a href="http://www.starnewsonline.com/section/topic99"><b>Wayne Faulkner</b></a>: 343-2329</p><p>On <a href="http://www.starnewsonline.com/section/news41"><b>Twitter</b></a>: @bizniznews</i></p>